Over the past few years, global demand for minerals and metals has grown significantly, primarily owing to an energy transition that is getting under way and to technological advances. Thanks to its vast mineral reserves and industrial capacity, Canada is well positioned to take advantage of the increase in global demand and to develop the associated value chains. To achieve that goal, however, Canada must first identify stakeholders that have an impact on the extraction and processing of its mineral resources.
Growth in Demand for Critical Minerals
Global demand for certain minerals and metals has increased considerably in recent years, and this upward trend is expected to continue. The increase is largely fuelled by the transition to new sources of energy and is primarily attributable to the fact that several minerals and metals are needed to manufacture advanced technologies and to produce and store low-emission energy (in lithium-ion batteries, for example). The World Bank estimates that demand for certain important minerals and metals, such as cobalt, graphite and lithium, could increase fivefold between 2018 and 2050. The growing demand for minerals is also driven by the rise in the manufacturing and development of several technologies, such as semiconductors and cutting-edge military hardware.
With demand for minerals and metals growing, many countries, including Canada, have developed a national list of the minerals they consider to be critical. This process is intended to guide investments and define priorities to support associated supply chains. A mineral is generally considered critical if it has no substitutes, has strategic importance, is available in limited quantities and is highly concentrated in terms of extraction and processing locations. Australia, the United States and the European Union have developed critical mineral lists similar to Canada’s; this overlap may be due to the nature of global supply chains and common challenges.
Domestic and International Production
Canada produces more than 60 different minerals and metals, including 21 of the 31 minerals it considers critical. It is the world’s largest producer and exporter of potash and, although it does not produce lithium or rare earth elements (REEs) in large quantities, it holds a substantial proportion of the global reserves of these minerals. While Canada is one of the top 10 global producers of cobalt, graphite, nickel and zinc, it accounts for less than 5% of the global output of each of these minerals.
Production and processing operations for several critical minerals are concentrated in certain regions. For example, global production in 2022 broke down as follows:
- Australia – 47% of lithium;
- Indonesia – 49% of nickel;
- People’s Republic of China (PRC) – 70% of REEs and 66% of graphite; and
- Democratic Republic of Congo – 70% of cobalt.
After being extracted, a mineral must be processed before it can be used. The PRC is the world leader in processing or refining several hard-to-process critical minerals, including cobalt, REEs and lithium. For its part, Canada has ample aluminum and uranium processing infrastructure.
The global concentration of critical mineral production and processing leaves Canada and its partners exposed to various risks, such as supply chain disruptions and restrictive measures introduced by certain countries. In 2022, the Government of Canada published the Canadian Critical Minerals Strategy, in which it underscored the need to secure and diversify supply chains.
Securing Critical Minerals Supply Chains
Ownership of Canadian Mining Assets
With demand for critical minerals growing, Canada has an opportunity to leverage not only its vast mineral resources, but also its ability to develop the entire advanced technologies value chain. For example, private companies, in collaboration with the federal and provincial governments, have announced several investments aimed at strengthening Canada’s electric vehicles value chain. Some of these investments will be used to build or modernize electric vehicle manufacturing facilities that plan to source their critical minerals locally.
As several stakeholders noted during the House of Commons Standing Committee on Industry and Technology’s study on critical minerals in 2022, to take full advantage of the development of advanced technologies value chains, Canada needs to lock down access to critical minerals. If Canada focuses exclusively on the production of these technologies and continues to import the minerals needed to build them, its supply chain will remain vulnerable, and Canada will remain dependent on other countries.
Because of Canada’s vast mineral resources, many companies, both Canadian and foreign, are investing in its deposits. As Figure 1 shows, 21 of the 47 critical mineral mines in Canada are owned by companies for which Canada is the country of residence of the ultimate parent company. Australia, Brazil and the PRC are the countries of residence of the ultimate parent companies of other mines located in Canada, including those producing lithium and REEs. The mines producing “other critical minerals” primarily extract potash and several critical minerals at the same time.
Figure 1 – Active Critical Mineral Mines in Canada, 2024
Sources: Map prepared by the Library of Parliament, 2024, using data obtained from Government of Canada, Canada’s Critical Minerals Map; Statistics Canada, Inter-corporate Ownership, 2022, 30 October 2023; LexisNexis, “Corporate Affiliations,” Database, accessed 2 February 2024; S&P Global, “S&P Capital IQ,” Database, accessed 29 February 2024; Websites of various corporations; Natural Resources Canada (NRCan), Administrative Boundaries in Canada – CanVec Series – Administrative Features, 1:5M, 2019; and NRCan, Lakes, Rivers and Glaciers in Canada – CanVec Series – Hydrographic Features, 1:5M, 2019. The following software was used: Esri, ArcGIS Pro, version 3.2.2. Contains information licensed under the Open Government Licence – Canada and the Statistics Canada Open Licence.
The Government of Canada defines an “advanced project” as a mining project with confirmed mineral reserves or resources, the viability of which is supported by a preliminary economic assessment or a prefeasibility study. These projects are associated with sites that extract or plan to extract at least one of Canada’s critical minerals, as well as other minerals and metals. Figure 2 shows that Canada is home to nearly 30 advanced graphite, lithium and REE projects. Twenty-two of those projects are owned by companies for which Canada is the country of residence of the ultimate parent company.
Figure 2 – Advanced Graphite, Lithium and Rare Earth Elements Projects in Canada
Sources: Map prepared by the Library of Parliament, 2024, using data obtained from Government of Canada, Canada’s Critical Minerals Map; Statistics Canada, Inter-corporate Ownership, 2022, 30 October 2023; LexisNexis, “Corporate Affiliations,” Database, accessed 2 February 2024; S&P Global, “S&P Capital IQ,” Database, accessed 29 February 2024; Websites of various corporations; Natural Resources Canada (NRCan), Administrative Boundaries in Canada – CanVec Series – Administrative Features, 1:5M, 2019; and NRCan, Lakes, Rivers and Glaciers in Canada – CanVec Series – Hydrographic Features, 1:5M, 2019. The following software was used: Esri, ArcGIS Pro, version 3.2.2. Contains information licensed under the Open Government Licence – Canada and the Statistics Canada Open Licence.
Lastly, as Figure 3 illustrates, only nine of the 33 critical mineral processing centres are owned by companies for which Canada is the country of residence of the ultimate parent company. Brazil, the United States, the United Kingdom, Switzerland, France and Germany are the countries of residence of the ultimate parent companies that own the other 24 processing centres, which primarily process aluminum or several critical minerals at the same time.
Figure 3 – Critical Mineral Processing Centres in Canada
Sources: Map prepared by the Library of Parliament, 2024, using data obtained from Government of Canada, Canada’s Critical Minerals Map; Statistics Canada, Inter-corporate Ownership, 2022, 30 October 2023; LexisNexis, “Corporate Affiliations,” Database, accessed 2 February 2024; S&P Global, “S&P Capital IQ,” Database, accessed 29 February 2024; Websites of various corporations; Natural Resources Canada (NRCan), Administrative Boundaries in Canada – CanVec Series – Administrative Features, 1:5M, 2019; and NRCan, Lakes, Rivers and Glaciers in Canada – CanVec Series – Hydrographic Features, 1:5M, 2019. The following software was used: Esri, ArcGIS Pro, version 3.2.2. Contains information licensed under the Open Government Licence – Canada and the Statistics Canada Open Licence.
The information in these figures provide a preliminary snapshot of the issues involved and the stakeholders that have an impact on the extraction and processing of Canada’s mineral resources. One of these issues concerns the security of the supply chain. To secure the supply chain, other factors, which are not illustrated in the figures above, must be taken into account, including the production capacity of the mines and processing centres, Canada’s technical expertise in processing critical minerals such as lithium or REEs, and the development of transportation infrastructure in rural and remote areas. Furthermore, the figures do not show the agreements signed with certain companies to reserve the output of a mine in advance.
It is important to note that ownership of mining assets can change considerably over time. Figures 1, 2 and 3 provide no indication of the identity or size of the other main investors in a given mining project. However, in its critical minerals strategy, the federal government has stated that it is committed to responding to concerns about the ownership of Canadian mining assets by adapting the foreign investment review regime and by working with local and international partners to harmonize policies. On the legislative front, Bill C-34, An Act to amend the Investment Canada Act, which seeks to strengthen the federal government’s jurisdiction to detect, review and restrict foreign investments that are potentially injurious to Canadian national security, received Royal Assent on 22 March 2024.
Outlook and Challenges
Bringing Canada’s mineral resources under national ownership could be one approach toward securing its critical mineral supply chains and developing the associated value chains. However, this process faces persistent barriers.
First, while Canada has abundant mineral resources, it faces a variety of barriers to extracting and processing critical minerals. These barriers include long waiting periods for new mine permits, ongoing struggles to raise capital, particularly for small businesses, and what stakeholders suggest is a complex financial and regulatory framework.
Second, the mining sector is facing labour challenges. According to the Mining Association of Canada, the sector is grappling with a severe shortage of workers, particularly skilled workers, and the problem could get worse as activity ramps up in the sector. In addition, while there has been an improvement in the representation of women in recent years, they accounted for only 15% of mining’s labour force in 2018. While Indigenous representation in the minerals sector has increased in the last decade, rising from 8% of the labour force in 2011 to 12% in 2021, Indigenous women continue to face barriers to their inclusion in this sector.
Although Indigenous communities often have rights or title to land that is rich in natural resources, persistent barriers prevent them from playing a leadership role in the mining sector. Despite the more than 500 agreements that have been signed since 2000 between Indigenous communities and mining companies, decision-making processes in the mining sector are not always inclusive, and systemic barriers continue to limit Indigenous participation and leadership in the mining industry. Furthermore, mining activities are having an adverse impact on these communities, particularly from an environmental standpoint, which highlights the importance of fully involving them in decision-making.
Conclusion
Canada is well positioned to capitalize on the growing global demand for critical minerals and to develop related value chains. However, a thorough assessment of all the factors affecting its supply chain is essential to identify its strengths and vulnerabilities. One important factor will be Canada’s ability to forge the international partnerships that are vital to developing a resilient critical mineral supply chain and stimulating growth in the associated value chains.
By Sarah Lemelin-Bellerose, Library of Parliament
Categories: Agriculture, environment, fisheries and natural resources, Business, industry and trade
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